Conference Agenda
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Thematic Session: Critical Minerals for the Clean Energy Transition
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Achieving climate goals and advancing the clean energy transition critically relies on a few essential minerals, such as lithium, nickel, cobalt or rare earths elements (REEs), that are vital to the production of batteries, wind turbines, solar cells, and electric motors. A major concern, however, is that the supply of critical minerals is geographically concentrated in only a few countries, making access vulnerable to geopolitical tensions. In 2022, Russia’s invasion of Ukraine caused nickel prices to spike to unprecedented levels threatening to slow down the production of electric vehicles. More recently, China announced new restrictions on the export of rare earth elements as part of the broader US-China trade dispute, placing many clean technology industries that rely heavily on REEs at risk.
The Thematic Session on Critical Minerals for the Clean Energy Transition will bring together cutting-edge empirical and theoretical research examining the economic and policy implications of rapidly rising demand for critical minerals. The session will explore consequences for both clean energy industries and mineral-rich countries as global decarbonization efforts accelerate. | ||
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Supply Shocks in Rare-Earths and Innovation for the Clean Energy Transition: Firm-level Evidence from France 1Graduate Institute of International and Development Studies, Geneva, Switzerland; 2Vrije Universiteit Amsterdam How do firms adjust their innovation decisions following supply disruptions in critical minerals? We examine this question by estimating the impact of the 2010 rare-earth elements (REEs) supply shock on the innovation activities of French firms along the clean technology supply chain. Combining patent and customs data for the 2002–2018 period, we exploit heterogeneity in firms’ product mixes to measure their exposure to the shock. Using a difference-in-differences framework with continuous treatment, we find that firms more exposed to the REE supply shock significantly increased innovation along the REE clean technology supply chain, particularly in downstream segments such as permanent magnets and wind energy generators. Input uncertainty in the green transition: Firm-level evidence on critical minerals London School of Economics and Political Science (LSE), United Kingdom We study how uncertainty about critical-mineral inputs affects firm performance, separating this second-moment channel from first-moment shocks and broader firm-level uncertainty. Using earnings-call transcripts matched to financial data for more than 14,000 publicly listed firms in 92 countries (2010-2022), we construct text-based measures of firm-level exposure to mineral-specific risk. Higher perceived mineral risk is associated with lower revenue growth among downstream non-mining firms, consistent with risk-averse firms contracting output under input uncertainty. A one-standard-deviation increase in mineral risk is associated with 0.71 percentage points lower revenue growth for the average non-mining firm, rising to roughly 1.9 percentage points for smaller firms. The effect is driven by firms reliant on non-traded minerals such as lithium, cobalt, and rare earths. Mining firms and firms exposed to exchange-traded minerals show no significant response. Discussion of hedging and stockpiling rises with price volatility rather than price levels, supporting a risk-aversion mechanism. Our findings highlight a new uncertainty channel in the green transition, with implications for strategic stockpiling and price transparency in critical-mineral markets. Opening mines under the risk of geoeconomic fragmentation: A real option approach 1PSE, Univ Paris 1 Panthéon Sorbonne; 2IREGE, Univ Savoie Mont-Blanc, OFCE; 3CEE-M, Univ Montpellier This article examines the economic rationale for opening new mines to extract critical raw materials (CRMs) in Europe, in search of strategic autonomy. We use a real-option framework to analyse a government's decision on the optimal timing of such an investment, taking into account mineral prices and domestic economic activity. The model incorporates geoeconomic fragmentation risk as a source of uncertainty that materialises as jumps in CRM prices. While uncertainty would be expected to delay the start of mining operations, our results show that a countervailing effect also exists, which increases the expected value of the developed mine. Furthermore, we show that the development of recycling does not clarify whether advancing extraction is ultimately socially desirable, underscoring the ambiguous theoretical implications of an expanding supply of secondary materials. The (Un)intended Consequences of Export Restrictions: Evidence from Indonesia 1Erasmus Universiteit Rotterdam; 2Virje Universiteit Amsterdam; 3CEPR; 4NHH Norwegian School of Economics An increasing number of developing countries are restricting non-renewable natural resource exports to encourage domestic processing, move up the global value chain, and spur local development. This paper studies the local labor-market effects of Indonesia’s voluntary export ban on unprocessed nickel and bauxite in 2014, previously a major source of export revenue. Exploiting plausibly exogenous variation in the timing of the ban, the opening of new processing facilities, and the location of Indonesia's mineral deposits, we find that - after an initial dip - major investments in nickel processing increased employment in nickel mining districts. New smelters drove structural change, shifting jobs from agriculture to mining and manufacturing. In sharp contrast, the ban only led to very limited investment in bauxite processing, causing bauxite production and local employment to fall. We also find that nickel processing raised mining employment in Indonesia's coal districts, which provide the main source of energy for nickel processing. Blasting Dust: The Pollution-Health Impact of Industrial Mining Developments 1PUC-Chile; 2IADB; 3IMF; 4University of Chile We study the pollution-health channel of the large-scale industrial mining developments leveraging exogenous variation in the geographical expansion of mineral leases in Chile over time and the distance to these installations. Using a battery of estimations in double differences and novel measures of expansion, we find a large negative impact of these developments on satellite-derived criteria air pollution concentrations within 50 km of these facilities, particularly SO$_2$. Later on, we link this increased pollution with the health outcomes of nearby communities. These results have important implications for the debate on the local welfare impact of mining developments | ||